Correlation Between BHP Group and Super Retail
Can any of the company-specific risk be diversified away by investing in both BHP Group and Super Retail at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BHP Group and Super Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHP Group Limited and Super Retail Group, you can compare the effects of market volatilities on BHP Group and Super Retail and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BHP Group with a short position of Super Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHP Group and Super Retail.
Diversification Opportunities for BHP Group and Super Retail
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BHP and Super is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding BHP Group Limited and Super Retail Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Super Retail Group and BHP Group is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BHP Group Limited are associated (or correlated) with Super Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Super Retail Group has no effect on the direction of BHP Group i.e., BHP Group and Super Retail go up and down completely randomly.
Pair Corralation between BHP Group and Super Retail
Assuming the 90 days trading horizon BHP Group is expected to generate 4.84 times less return on investment than Super Retail. But when comparing it to its historical volatility, BHP Group Limited is 1.33 times less risky than Super Retail. It trades about 0.03 of its potential returns per unit of risk. Super Retail Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,450 in Super Retail Group on September 12, 2024 and sell it today you would earn a total of 39.00 from holding Super Retail Group or generate 2.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHP Group Limited vs. Super Retail Group
Performance |
| Timeline |
| BHP Group Limited |
| Super Retail Group |
BHP Group and Super Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHP Group and Super Retail
The main advantage of trading using opposite BHP Group and Super Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHP Group position performs unexpectedly, Super Retail can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Super Retail will offset losses from the drop in Super Retail's long position.| BHP Group vs. Northern Star Resources | BHP Group vs. Evolution Mining | BHP Group vs. Bluescope Steel | BHP Group vs. Sandfire Resources NL |
| Super Retail vs. Aneka Tambang Tbk | Super Retail vs. BHP Group Limited | Super Retail vs. Commonwealth Bank | Super Retail vs. Commonwealth Bank of |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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